The only constitutional requirement placed on Missouri lawmakers is to pass a balanced budget, and the Missouri Legislature has taken its responsibility very seriously by passing a balanced budget every year. To do so, they have had to cut spending and not raise taxes. As a result, Missouri holds a triple-A bond rating, one of only seven state governments to have this rating.
The FY 2014 Legislative’s budget process is in full swing. This process can be complicated and time-consuming, but it is extremely important in determining the revenues and expenditures necessary to run state government.
Revenue for Missouri’s FY 2014 budget comes from three main areas: general revenue, federal funds, and other funds. Each of these three make up approximately one-third of the state’s $24 billion budget. General revenue is comprised of individual income taxes, sales and use taxes, Missouri corporate income taxes, capital gains taxes, and alcohol taxes. The federal funds that come to the state are mandated for education, Medicaid, and highways. Those funds that are mandated for highways were collected in the form of federal gas taxes and then returned to the state to be used for highways. Other funds that make up the revenue source for the budget are the state’s gas tax, money from lottery and gaming, Prop C money and cigarette tax, and Conservation, Parks, Soil, and Water funds.
Of the three revenue sources, the only one that the state legislators have any control over is the $8 billion of general revenue money. Of this money, by law, the state is required to appropriate at least 25% to elementary and secondary education. In FY 2013, we appropriated 36.40% to K-12 education and 10.6% to higher education. Social services and mental health claimed just under 30% of the general revenue money. However, when all three revenue sources are combined, the picture changes to show that K-12 and higher education take up just over 27% of the budget, and social services, health and mental health take up just under 45% of the entire state budget, while K-12 and higher education take up just over 27% of the budget. It is interesting to note that the main expense in the social service category is Medicaid.
Medicaid expansion will be one of the most debated topics this session. Governor Nixon has recently endorsed the plan to expand Medicaid eligibility in our state. Currently the Obama Administration is encouraging all state governments to add large numbers of people to the Medicaid program as part of the Affordable Healthcare Act. Under Governor Nixon’s proposal, 300,000 additional Missourians will become eligible. The additional individuals added to the program include only healthy adults under the age of 65 who earn up to 138% of the “poverty level.” That level is now $31,809 annually for a family of four. This proposal does not affect the eligibility of children, pregnant women, the elderly, or the disabled, as these individuals are already covered.
Under this proposal, by 2020 Missouri will accept up to $17.8 billion in federal funds at a cost of $1.6 billion to our state’s budget. Nationwide, the total cost of the Medicaid expansion will be $1 trillion over ten years, with the federal government picking up 90% of the tab. Though the federal government has promised to pay most of the cost in the early years, by 2020 Missouri will have to pick up 10% of the new Medicaid costs. Before Missouri goes down this path, we need to carefully consider the long-term ramifications to our state and to future generations. Governor Nixon and his supporters are calling these funds “free money” from the federal government, declaring that our state will take it or it will go to another state. With our present federal debt at $16.4 trillion and projected to increase to $22 trillion in four years, we as citizens must consider the implications for future generations with this type of program.